Dec. 13 (Bloomberg) -- An International Business Machines
Corp. shareholder sued the company over claims its cooperation
with a National Security Agency eavesdropping program caused a
drop in sales in China, hurting investors.

The Louisiana Sheriffs’ Pension and Relief Fund, in a
complaint filed yesterday in Manhattan federal court, accuses
IBM of defrauding investors by concealing that sales slowed
after Edward Snowden disclosed the company was cooperating with
the NSA.

In June, documents released by Snowden revealed the NSA’s
“Prism” surveillance program, which used information from
technology companies such as IBM, the pension fund said. IBM
also lobbied in favor of a bill that would allow it to share
customers’ personal data, including data from users in China,
with the NSA, according to the complaint.

“The company knew but misrepresented or concealed from
investors that the disclosures of its lobbying and its
association with the Prism and NSA spying scandal caused
businesses in China as well as the Chinese government to
abruptly halt doing business with IBM, leading to an immediate,
and precipitous decline in sales,” the pension fund said in its
complaint.

China Sales

On Oct. 16, IBM, the largest computer-services provider,
reported a 22 percent drop in sales in China compared with the
previous quarter as a result of the Snowden disclosures,
according to the Louisiana fund, which said it pays retirement,
death and disability benefits to more than 20,000 active and
retired employees of sheriff’s offices throughout the state.

The suit is “pushing a wild conspiracy theory,” IBM’s
general counsel, Robert Weber, said in a statement today. “This
lawsuit seeks to confuse IBM’s support for a U.S. cybersecurity
legislative proposal -- which has yet to be enacted -- with the
completely unrelated NSA surveillance program called PRISM,”
Weber said in the statement. “Even a cursory reading of the
legislative proposal, known as CISPA, makes clear that it has
nothing to do with the recently disclosed NSA surveillance
program.”

The pension fund is seeking to represent a class of
investors who bought IBM stock from June 25 to Oct. 16.

The case is Louisiana Sheriffs’ Pension & Relief Fund v.
International Business Machines Corp., 13-cv-08818, U.S.
District Court, Southern District of New York (Manhattan).